As baby boomers look toward retirement, many of them will face the beginning of required minimum distributions (RMDs) from their varied retirement accounts. These RMDs outline the minimum amount a retiree must withdraw from their retirement accounts annually. RMDs can be difficult to understand, and their language isn’t always clear. However, here are a few pointers that can help you better grasp them:
Your birth date matters. The date of your first withdrawal directly relates to when you were born. To avoid errors, most retirees should take a distribution by December 31 following their 70 ½ birthday and by December 31 every year after that.
Consider aggregation rules for distributions.
The total amount you need to distribute can be taken from any account, or across multiple retirement accounts. Keep this in mind when doing your planning.
Calculate the actual distribution required.
The RMDs estimated distributions are calculated by dividing the balance by the appropriate life expectancy table. However, other factors, such as your spouse’s age and beneficiary status, should also play a part in the calculation.
If you’d like to learn more about RMDs and how to plan with them in mind for your retirement, read our article, “Don’t let RMDs Taint Your Retirement Plans,” in Columbia Daily Tribune.
As a financial planner specializing in comprehensive financial planning, Tim enjoys helping clients in Columbia, MO with managing their taxes, financial risks and other financial issues.
If you would like to learn more about this and other personal financial planning topics serviced by Clarity Financial please contact us at 573-447-7007. Clarity Financial, LLC is a fee-only financial advisory firm in Columbia, MO. Appointments are welcome and initial consultations are free.
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